RadiumOne Responds to Drug Use and Prostitution Claims Against Ex-CEO

Over the weekend, RadiumOne's board of directors voted to "terminate the employment" of CEO and Chairman Gurbaksh Chahal related to his guilty plea for domestic violence. But an internal memo clarifying the situation shows that Chahal is still on the board of the online advertising network, even though he's no longer chairman.

Re/code has the full text of the surprisingly transparent memo from new CEO Bill Lonergan:

How will the company be able to move forward with Gurbaksh retaining his seat on the board?

The company will remain fully functional even with Gurbaksh on the board. He has no executive authority and because of the composition of the Board Gurbaksh cannot impact any decisions affecting the business.

The memo also acknowledges allegations about Chahal from his former executive assistant Rafael Rojas. However Lonergan does not spell out that the assistant accused Chahal of hiring prostitutes and drug use, including Adderall.

Those allegations only became public because Chahal sued Rojas and Chahal's driver for embezzlement last year, before dismissing the suit in August. The server for the San Francisco Superior Court appears to be down right now, but Business Insider has a copy of an email from Rojas to Lonergan (RadiumOne's board member turned CEO) and you can find the case filings here. I will embed the complaint when the server is working.

According to Business Insider, the email to Lonergan was sent June 9, 2013:

"As you know Gurbaksh has pushed the line before, particularly with prostitutes. But now like I told you he is getting into drug use, including trying to get me to get him Adderall and other drugs illegally. He has also tried to get me to drug girls (without them knowing) so to make sure they don't get pregnant."

Chahal strongly denied those allegations, claiming the defamatory statements were used to cover up the alleged theft of more than $1 million. Rojas and his co-defendants did not respond to questions from Valleywag this weekend. Matthew Kenefick, the lawyer who represented Rojas, declined to comment.

In today's memo, Longeran maintains that management did not acted irresponsibly in response to the assistant's claims:

Some of you have also asked about the allegations made by Rafael Rojas and, specifically, if management turned a blind eye to allegations of illegal and unscrupulous activities by Gurbaksh.

For reasons that we hope you can respect, Rafael Rojas' employment with the company, and the reasons for his separation, are private personnel matters and we are not in a position to comment on these matters. The company believes that at all times it acted responsibly and in the best interests of the company.

In another bit of unexpected transparency, the memo addresses allegations from Chahal that his board of directors pressured him into taking the plea rather than exonerate himself. Chahal was initially charged with 45 felony counts last August. The judge suppressed a video that allegedly showed Chahal hitting and kicking his girlfriend 117 times in half an hour. After that, Chahal's lawyer was able to get him with no jail time and only two misdemeanors for domestic violence and battery.

While the board was announcing its decision, Chahal went berserk on Twitter and on his blog. In one of the posts asserting his innocence, Chahal included an email from one of his board members as proof that they continued to support him even after he pled guilty:

On Wednesday, I received an email from Robin Murray, one of my board members, with the following message. "Been thinking some more. Absolutely don't do anything. Let the haters hate ad move on. This will blow over very quickly and we focus on the IPO. Don't let them get to you. Don't respond. I know it sucks but i think this is the right way fwd. Stay strong amigo. I feel for you."

Lonergan's memo to RadiumOne employees said:

We've seen an email from a board member on Gurbaksh's blog that suggests the board was supportive of Gurbaksh. Isn't this at odds with terminating his employment?

The email paraphrased on Gurbaksh's blog was in fact sent, but was taken out of context. The communication was an effort to discourage Gurbaksh from hurting himself by talking with the media.

Gurbaksh has also suggested that the board influenced him to accept the plea deal with the district attorney. Is that true?

Gurbaksh and only Gurbaksh made the final decision on whether to accept the plea agreement. He asked many people for their advice and opinions and the board offered that an outcome which prevented prolonged court proceedings might be in the best interests of the company but it never pressured him into that course of action. Gurbaksh was represented by very competent legal counsel. We must assume that Gurbaksh made the decision he did because he thought that was the best outcome.

Chahal's unhinged social media strategy over the weekend indicates that he does not always seek the advice of the entourage he employs to maintain his innocence.